{ "id": 19338, "date": "2026-10-20T14:45:55", "date_gmt": "2026-10-20T06:45:55", "guid": { "rendered": "https:\/\/www.ibon.org\/?p=19338" }, "modified": "2026-10-20T14:45:56", "modified_gmt": "2026-10-20T06:45:56", "slug": "how-imf-wb-remade-the-ph-economy", "status": "publish", "type": "post", "link": "https:\/\/www.ibon.org\/en\/how-imf-wb-remade-the-ph-economy\/", "title": { "rendered": "How the IMF and World Bank remade the Philippine economy" }, "content": { "rendered": "

\u201cWhen I use a word it means just what I choose it to mean,\u201d declared Humpty Dumpty in Lewis Carroll\u2019s Through the Looking-Glass<\/em>. When questioned why he can make words mean so many different things, he replied: \u201cThe question is which is to be master \u2013 that\u2019s all.\u201d<\/p>\n\n\n\n

The exchange pretty much describes decades of Philippine economic policymaking under the influence of the International Monetary Fund (IMF) and World Bank.<\/p>\n\n\n\n

Development came to mean attracting foreign investment. Efficiency meant privatization. Competitiveness meant cheap labor. Reform meant removing restrictions on foreign capital. Fiscal responsibility meant prioritizing creditors and investors over public services.<\/p>\n\n\n\n

But the real question, as Humpty Dumpty understood, is who gets to decide what these words mean \u2013 and whose interests their meanings serve.<\/p>\n\n\n\n

Instruments of power<\/em><\/strong><\/p>\n\n\n\n

The IMF-World Bank have just ended their annual meeting for 2026 in Bangkok, Thailand, speaking<\/a> about their \u201coptimism and worry\u201d about the global economy and giving their policy advice to economic managers, finance ministers and central bankers around the world. They present themselves as benevolent international institutions providing neutral economic expertise and financing to promote financial stability, development, and poverty reduction. These are just words, however, and their real meaning is inextricably linked to their role within the larger architecture of United States (US) geopolitical and economic power.<\/p>\n\n\n\n

Established at Bretton Woods in 1944, both institutions became important components of the US-led postwar international order. The US remains their largest shareholder with disproportionate influence over their governance and strategic direction, and is the only member with unilateral veto power over their major decisions.<\/p>\n\n\n\n

Washington makes little secret of their strategic value. The US Treasury\u2019s recent July 2025 report<\/a> to Congress, for instance, candidly admits how the US has used its position as the IMF\u2019s largest shareholder to shape the institution\u2019s priorities since its establishment in 1944. The report also says it will use international financial institutions (IFIs) like the IMF-World Bank as a strategic instrument for advancing US interests, particularly the Trump administration\u2019s America First agenda.<\/p>\n\n\n\n

In the Philippines, as in many other parts of the world, US influence is exercised through an interconnected system of diplomatic relations, military and security agreements, bilateral trade and investment arrangements, multilateral institutions such as the IMF-World Bank and the World Trade Organization (WTO), foreign investment, and the dollar-centered international financial system. This is further reinforced through influence over civil society, think tanks, media and academia. Taken together, these sustain US strategic dominance and the country\u2019s neocolonial dependence.<\/p>\n\n\n\n

The IMF and World Bank have been extremely consequential in shaping domestic economic policy. The Philippines\u2019 post-war protectionist and state-interventionist economic regime was broadly typical of underdeveloped countries during the 1940s-1970s. These policies reflected the prevailing development consensus then that markets alone could not overcome colonial economic legacies, structural underdevelopment, and dependence on industrialized countries.<\/p>\n\n\n\n

Then came the age of neoliberalism. Since the 1970s, the IMF-World Bank have been at the forefront of dismantling that economic regime and making economies liberalized, deregulated, and privatized, to make economies as market-oriented and integrated into global trade and financial markets as possible. The peak of intensity in terms of their hard policy interventions was in the 1980s and 1990s, amid severe economic crises and the political upheaval following the breakup of the Soviet Union.<\/p>\n\n\n\n

Long arm of underdevelopment<\/em><\/strong><\/p>\n\n\n\n

The Philippines stands out even among developing countries subjected to IMF-World Bank intervention. Their intervention in the country\u2019s economic policymaking has been exceptionally prolonged and far-reaching. The Philippines was the second country in the region to enter an IMF program, in 1962, just six months after Indonesia, and the first to undertake a World Bank structural adjustment program (SAP), in 1980.<\/p>\n\n\n\n

The IMF\u2019s own Independent Evaluation Office (IEO) even described the Philippines as \u201cprobably the most extreme<\/a> case of prolonged use of IMF resources\u201d. The country underwent 23 IMF programs from 1962 and 2000 \u2013 borrowing SDR3.9 billion (equivalent to US$5.3 billion at current exchange rates) \u2013 and was under IMF arrangements for 25 of 30 years between 1971 and 2000.<\/p>\n\n\n\n

All these loans have been repaid but the IMF still officializes its policy preferences for the country annually under its so-called Article IV Consultations. The most recent consultations at the end of 2025 continued recommending fiscal consolidation, investment liberalization, capital-market development, and other market-biased reforms.<\/p>\n\n\n\n

World Bank involvement is similarly extensive, with 236 projects and US$38.3 billion in cumulative commitments between 1957 and September 2026. Out of some 150 countries that the World Bank has ever lent to, the Philippines is the Bank\u2019s 12th<\/sup> largest borrower.<\/p>\n\n\n\n

Around 81% of World Bank commitments to date have been for physical investments (46%) and policy or budget support (35%), with services and human development a distant third (14%). By sector, around 73% of commitments have been concentrated in multisectoral projects (28%), agriculture and rural development (13%), finance (10.9%), environment (10.8%), and transport (10.5%).<\/p>\n\n\n\n

Recent developments are striking \u2013 the country has become an even higher ranked borrower in recent years and its US$17.6 billion in outstanding World Bank loans as of mid-2026 places it third among some 140 countries with lending programs.<\/p>\n\n\n\n

Some US$4.1 billion in approved and pending development policy loans (DPLs) since 2024 include conditionalities on liberalizing foreign ownership and market access, expanding public-private partnerships, promoting private investment and competition in energy and infrastructure, commercializing public water utilities, deepening financial markets, and reforming taxation, public procurement, government administration, and education.<\/p>\n\n\n\n

Why such extraordinary attention? The country\u2019s strategic importance to US imperialism provides essential context. For instance, until 1991, the Philippines hosted the US\u2019s largest overseas air and naval bases which were the center of gravity of American Cold War containment strategy in East and Southeast Asia. Today, the Philippines is on the literal US military frontlines of containing Chinese expansion in the region, as well as a key node in America\u2019s Pax Silica drive for semiconductor and artificial intelligence (AI) domination.<\/p>\n\n\n\n

The convergence between US strategic priorities and World Bank involvement is evident. On May 18, 2026, the World Bank\u2019s Vice President for Infrastructure, Val\u00e9rie Levkov, joined a select US delegation led by Under Secretary of State Jacob Helberg in unveiling the Pax Silica<\/a> marker at the New Clark City Economic Security Zone. She is the highest-ranking official specifically responsible for infrastructure, energy, metals and minerals, transport and private-capital mobilization across the entire World Bank Group.<\/p>\n\n\n\n

Similarly, senior World Bank Group officials, including the head of its Global Infrastructure Facility (GIF) and the International Finance Corporation\u2019s (IFC) Philippine country manager, were part of the Luzon Economic Corridor (LEC) Investment Forum held in September in Manila. Pax Silica seeks to establish US-controlled supply chains for semiconductors, artificial intelligence, critical minerals, and other strategic technologies. Its proposed Philippine industrial hub forms part of the LEC linking Subic, Clark, Manila, and Batangas.<\/p>\n\n\n\n

These indicate how the World Bank\u2019s recent expanding involvement in the Philippines isn\u2019t simply about development financing but is aligned with the country\u2019s growing importance in current US geopolitical and economic strategy.<\/p>\n\n\n\n

Tag-team policymaking<\/em><\/strong><\/p>\n\n\n\n

The IMF and World Bank have had complementary roles in restructuring the Philippine economy.<\/p>\n\n\n\n

The IMF concentrated on macroeconomic variables: government deficits, inflation, interest rates, exchange rates, external payments, and debt servicing. Its stabilization programs prioritized fiscal austerity, monetary restraint, liberalized financial markets, and maintaining creditor confidence. Economic stability also means ensuring that debts are paid and that capital operates profitably.<\/p>\n\n\n\n

The World Bank intervenes more directly in the structure of production and the organization of economic activity. Its structural adjustment loans (SALs), sectoral adjustment loans (SECALs),  DPLs, investment projects, and technical assistance promoted trade and investment liberalization, privatization, and deregulation, provided supporting infrastructure, and indoctrinated government agencies in neoliberal dogma.<\/p>\n\n\n\n

The two institutions reinforced each other. For instance, IMF-backed fiscal constraints restricted developmental spending in infrastructure and social services while World Bank prescriptions encouraged private foreign and domestic capital to fill the gaps. At the same time, macroeconomic stabilization policies created favorable conditions for these investors to maximize profits.<\/p>\n\n\n\n

Because, notwithstanding \u201cfree market\u201d rhetoric, neoliberalism doesn\u2019t really eliminate the state. It is the systematic reorientation of the state away from any notion of actively developing national productive capacities toward actively creating profitable conditions for foreign and domestic capital.<\/p>\n\n\n\n

Together, the IMF-World Bank as intervened in virtually every major sphere of economic activity. They combined direct policy prescriptions \u2013 through stabilization programs, SALs, SECALs and DPLs \u2013 with more discreet but sustained pressure through projects and technical support to government agencies. The general direction of all this is to expand profit-making even at the expense of the people\u2019s immediate welfare and the economy\u2019s long-term development.<\/p>\n\n\n\n

Long arc of underdevelopment<\/em><\/strong><\/p>\n\n\n\n

The decades-long and continuing interference of the IMF-World Bank started with IMF-backed foreign exchange decontrol in the 1960s which weakened earlier controls over external transactions.<\/p>\n\n\n\n

In the 1970s, the Marcos dictatorship had scattered trade and investment liberalization measures before starting on more systematic reform programs with the first World Bank SAL in 1980. Tariffs were cut to let in more and more imports. The debt crisis in the early 1980s gave especially powerful leverage for the IMF-World Bank to impose \u201cfree market\u201d reforms.<\/p>\n\n\n\n

Successive administrations deepened these policies inthe 1990s, in particular, seeing an extraordinary concentration of neoliberal restructuring. The Foreign Investments Act of 1991 relaxed restrictions on foreign capital. Foreign exchange liberalization followed in 1992, alongside foreign bank liberalization in 1994. More tariff reform programs, Association of Southeast Asian Nations (ASEAN) free trade commitments, and WTO accession in 1995 accelerated the opening of domestic markets.<\/p>\n\n\n\n

Specific sectors were targeted with telecommunications, shipping, airlines, and oil liberalized or deregulated. The Mining Act of 1995 expanded opportunities for foreign mining interests. Build-Operate-Transfer (BOT) legislation and the National Water Crisis Act opened key infrastructure and public services to profit-seeking by private capital.<\/p>\n\n\n\n

The 2000s saw further liberalization of retail trade, finance, shipping, and electricity. The World Bank was particularly instrumental in designing the Electric Power Industry Reform Act (EPIRA) of 2001 to make the power sector the most highly privatized in the region. Trade liberalization continued through free trade deals with Japan (2008) and ASEAN, followed by more commitments under the Regional Comprehensive Economic Partnership (RCEP) in 2023.<\/p>\n\n\n\n

The 2010s further opened up banking to foreign capital, had the Rice Tariffication Law of 2019 dismantling long-standing rice import restrictions, and saw additional measures to promote market competition and private investment.<\/p>\n\n\n\n

The liberalization drive continued into the 2020s with laws further easing foreign ownership restrictions in retail trade, public services, and other industries. Expanded public-private partnership arrangements and longer land leases for foreign investors reinforced the decades-long shift toward greater foreign capital participation, private control of infrastructure and public services, and market-driven economic development.<\/p>\n\n\n\n

Economic harm<\/em><\/strong><\/p>\n\n\n\n

The adverse effects of IMF-World Bank-driven neoliberalism on the Philippine economy and the Filipino people are well-established.<\/p>\n\n\n\n

IMF stabilization programs and World Bank structural adjustment in the early 1980s caused record-high inflation, soaring joblessness and poverty, and the worst economic contraction outside of the pandemic. Austerity hit education, health and housing, which remain underfunded today, while debt payments remained sacrosanct. Domestic farming and incipient manufacturing struggled against a deluge of cheap imports.<\/p>\n\n\n\n

The radical \u201cfree market\u201d restructuring of the economy resulted in two decades of lost development \u2013 the Philippine economy took until 2003 to regain its 1983 level of gross domestic product (GDP) per capita, or level of output per person. But this recovery was also transformation for the worse.<\/p>\n\n\n\n

The economy was set on the path of continuous decline. The share of production in the economy \u2013 agriculture, manufacturing, construction and mining \u2013 started falling upon the systematic implementation of IMF-World Bank-driven neoliberal economic policies.<\/p>\n\n\n\n

By 2025, manufacturing had fallen to 17.4% of GDP which is its smallest share in 80 years, and agriculture to 7.9% or its smallest in the country\u2019s history. On the other hand, the trade deficit has already grown to its largest on record, averaging US$53.6 billion or 12.5% share of GDP annually since 2022. Persistent import dependence remains a stark indicator of inadequate domestic productive capacity.<\/p>\n\n\n\n

The failure to develop agriculture and Filipino industry is the fundamental reason for millions of Filipinos being deprived productive livelihoods \u2013 with widespread informality, insecure employment, low wages, rural poverty, and forced labor migration. Meanwhile, public services are underfunded, commercialized and privatized to be run for profit. These are not aberrations but the systemic outcomes of the IMF-World Bank\u2019s neoliberal economic model.<\/p>\n\n\n\n

Political economic hooks<\/em><\/strong><\/p>\n\n\n\n

At the same time, the real beneficiaries of these policies have only become more powerful and entrenched. Foreign corporations and capital have expanded their presence in the country\u2019s manufacturing, finance, infrastructure, utilities, property, and service sectors. Their investments create vested interests in preserving liberalized markets, favorable taxation, unrestricted profit repatriation, and investor protections.<\/p>\n\n\n\n

Domestic comprador oligarchs have similarly accumulated enormous economic and political power. The Razon, Sy, Ang, Co, Consunji, Tan, Zobel de Ayala, Que Azcona, Villar, Ty, Aboitiz, Tan Caktiong, Gokongwei and a few other conglomerates have made fortunes from banking and finance, property development, utilities, consumer retail and pharmaceuticals, food and beverage, global port logistics, and diversified infrastructure. These are among the sectors transformed by IMF-World Bank-directed liberalization, privatization, and deregulation.<\/p>\n\n\n\n

Yet while these conglomerates prospered, they did so without building a diversified national industrial economy. If anything, import dependence, privatized monopolies, speculative property development, and infrastructure concessions are highly profitable precisely because national productive development remains weak.<\/p>\n\n\n\n

The resulting oligarch concentration of wealth translates into political influence through billionaire-backed political parties, campaign financing, lobbying, media ownership, and close relationships with government officials. The system created is self-reinforcing \u2014 where neoliberal policies strengthen powerful economic interests, which then use their accumulated power to defend and extend those policies.<\/p>\n\n\n\n

The persistence of neoliberalism and pre-industrial economic backwardness is therefore not merely from external coercion comingled with intellectual subordination and consent<\/a>. It is also increasingly sustained by the material interests of the country\u2019s most powerful economic and political classes.<\/p>\n\n\n\n

Breaking the cycle<\/em><\/strong><\/p>\n\n\n\n

The IMF-World Bank are a historical phenomenon in the Philippines whose interventions have evolved but remain extremely potent. They have done much to institutionalize foreign domination, entrench neoliberalism as economic orthodoxy, and make underdevelopment self-perpetuating.<\/p>\n\n\n\n

Breaking this cycle requires more than rejecting particular IMF-World Bank prescriptions. It means fundamentally changing the economic priorities and class interests that determine national policy. But economic sovereignty isn\u2019t simply declared and must be won through organized popular struggle against the foreign and domestic interests that benefit from the existing order. <\/p>\n\n\n\n

After more than six decades of intervention, the question remains\u2014who decides the country\u2019s economic future? As Humpty Dumpty asked Alice: Which is to be master?<\/p>\n\n\n\n

<\/p>", "protected": false }, "excerpt": { "rendered": "

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